B-158207, JAN. 14, 1966

B-158207, JAN. 14, 1966

TO VICE ADMIRAL JOSEPH M. LYLE, DIRECTOR, DEFENSE SUPPLY AGENCY:

BY LETTER DATED DECEMBER 16, 1965, WITH ENCLOSURES (YOUR REFERENCE DSAH- G), THE ASSISTANT COUNSEL REQUESTED OUR DECISION AS TO WHETHER THE DEFENSE LOGISTICS SERVICES CENTER MAY RESCIND CONTRACT NO. DSA 11 6023-024 BECAUSE OF AN ALLEGED MISTAKE IN BID AFTER AWARD. THE AWARD WAS MADE TO THE POMEROY SHIPPING CORPORATION, P.O. BOX 214, BOYNTON BEACH, FLORIDA, ON SEPTEMBER 21, 1965, AS A RESULT OF ITS RESPONSIVE HIGH BID ON ITEM NO. 130 OF INVITATION FOR BIDS (IFB) NO. 11-6023.

MR. JOHN C. POMEROY, PRESIDENT OF THE POMEROY SHIPPING CORPORATION, BY A NOTARIZED STATEMENT, INCLUDED IN THE FILE, STATED THAT HE PREPARED, TYPED, AND SUBMITTED THE BID IN QUESTION FULLY INTENDING TO BID ON ITEM NO. 107 OF THE IFB, DESCRIBED AS FOLLOWS:

"107. PARTS, DIESEL ENGINE, MISC: CLEVELAND DIESEL ENGINE DIV. OF GMC, CONSISTING OF ONE OR MORE OF THE FOLLOWING:BEARING, CYLINDER HEAD ASSY., CYLINDER LINER ASSY., GASKETS, PISTON RINGS, PISTON, THERMOCOUPLE, CONNECTING ROD, LUBE OIL PUMP, CAM-SHAFT IDLER GEAR, FRESH WATER PUMP, SEAWATER PUMP, CORE AND JACKET LUBE OIL COOLER ASSY., CORE AND JACKET WATER COOLER ASSY. ESTIMATED 5,200 PIECES. FOR USE WITH MODEL 8-268A DIESEL ENGINE. CONTAINED IN BOXES-INSIDE STORAGE-UNUSED.'

BUT BECAUSE OF A TYPING ERROR THE BID WAS INSTEAD SUBMITTED ON ITEM NO. 130, FOUND THREE PAGES LATER ON THE SAME PART OF THE PAGE AS ITEM NO. 107, WHICH READS:

"130. PARTS, DIESEL ENGINE, MISC: CONSISTING OF THE FOLLOWING ESTIMATED QUANTITIES:

1 EACH - AIR INTAKE SILENCER FOR GM DIESEL ENGINE, FSN 2990 036 3741

1 EACH - CUTLESS BEARING, 5 1/4 INCHES ID BY 6 7/8 INCHES OD BY 21

INCHES LGTH

2 EACH - CUTLESS BEARING, 5 1/4 INCHES ID BY 7 INCHES OD BY 21 INCHES

LGTH

1 EACH - CONTROL AIR HD-2-FM VALVE ASSY. WESTINGHOUSE P-51121,

CUMMINS 104475

2 EACH - REDUCING VALVES, WESTINGHOUSE, P-51609, CUMMINS 106015

NOT PACKED - I SIDE STORAGE - UNUSED.'

THE CONTRACTING OFFICER WAS PUT ON NOTICE OF A POSSIBLE MISTAKE IN BID BECAUSE POMEROY'S BID WAS EXCESSIVELY HIGH IN RELATION TO THE OTHER BIDS SUBMITTED, AND THE MARKET APPRAISAL. THE ABSTRACT OF THE BIDS REVEALED THAT THERE WERE THREE OTHER BIDS ON ITEM NO. 130 RANGING FROM A LOW OF $36 TO A HIGH OF $176, AND THAT POMEROY'S HIGH BID WAS $1,179; OR OVER $1,000 HIGHER THAN THE SECOND HIGH BID. THE MARKET APPRAISAL OF THE ITEM WAS $125.

ON SEPTEMBER 21, 1965, PRIOR TO THE AWARD, MR. POMEROY VERIFIED HIS BID AS CORRECT. HOWEVER, IN TELEPHONING FOR VERIFICATION, THE CONTRACTING OFFICER DID NOT BRING THE NATURE OF THE SUSPECTED ERROR TO THE ATTENTION OF THE BIDDER.

GENERALLY, THE AWARD OF A CONTRACT PREDICATED UPON A VERIFICATION OF THE BID BY THE CONTRACTING OFFICER RESULTS IN A BINDING CONTRACT. 18 COMP. GEN. 942; 27 ID. 17. BUT SEE 44 COMP. GEN. 383 WHERE IT WAS HELD THAT:

"... WHERE, AS HERE, THE BIDDER HAS NOT BEEN PLACED ON NOTICE OF THE NATURE AND EXTENT OF THE MISTAKE WHICH IS SUSPECTED, OUR OFFICE HAS RECOGNIZED AND FOLLOWED THE RULING IN UNITED STATES V. METRO NOVELTY MANUFACTURING COMPANY, 125 F.SUPP. 713, THAT REAFFIRMATION OF A BID, WHERE THE PLAINTIFF WAS NOT PLACED ON NOTICE OF THE MISTAKE WHICH THE GOVERNMENT SURMISED, DID NOT BAR THE DEFENSE OF RESCISSION.'

THE PRINCIPLE IN THE METRO CASE HAS BEEN INCORPORATED IN THE ARMED SERVICES PROCUREMENT REGULATION IN PARAGRAPH 2-406.3 (E) (1), WHEREIN CONTRACTING OFFICERS ARE INSTRUCTED TO INFORM BIDDERS, IN THE CASE OF SUSPECTED BID MISTAKES OF SUCH INFORMATION AS WILL GIVE THEM NOTICE OF THE SUSPECTED MISTAKE.

ON THE BASIS OF THE FACTS SUBMITTED WE THINK THERE IS A REAL QUESTION WHETHER THE BARE CONFIRMATION OF THE BID WAS SUFFICIENT TO PLACE THE BIDDER ON NOTICE OF THE ERROR SUSPECTED, AS REQUIRED BY THE METRO CASE, SUPRA. SEE OUR DECISION B-154095 OF MAY 24, 1964, WHEREIN IT WAS HELD, UNDER SIMILAR CIRCUMSTANCES, THAT BECAUSE THE ENTIRE FACTUAL SITUATION WAS NOT BROUGHT TO THE BIDDER'S ATTENTION, IN EFFECT, THE BIDDER WAS DENIED THE OPPORTUNITY, IN A "COMPLETE SENSE," TO VERIFY ITS BID. ALSO SEE 35 COMP. GEN. 136; 36 ID. 254; 37 ID. 786; AND B-137508, DECIDED SEPTEMBER 21, 1959.

ACCORDINGLY, FOR THE REASONS ABOVE-STATED, THE CONTRACT SHOULD BE RESCINDED.